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Diversification and resilience of firms in the agrifood supply chain

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  • Andrew W. Stevens
  • Jim Teal

Abstract

Are diversified firms more resilient to negative market shocks than specialized firms? We answer this question in the context of the COVID‐19 pandemic by analyzing data from small‐ and medium‐sized firms in the U.S. agrifood supply chain. We first develop revenue‐based measures of firms' vertical (across supply‐chain segment) and horizontal (within supply‐chain segment) diversification. We then compare post pandemic outcomes of more diversified and less diversified firms using several inverse‐probability weighting techniques. We find that vertical diversification reduces firms' resilience, whereas horizontal diversification increases firms' resilience.

Suggested Citation

  • Andrew W. Stevens & Jim Teal, 2024. "Diversification and resilience of firms in the agrifood supply chain," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 739-778, March.
    • Handle: RePEc:wly:ajagec:v:106:y:2024:i:2:p:739-778
    DOI: 10.1111/ajae.12398
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    1. Furbush, Ann M. & Josephson, Anna & Kilic, Talip & Michler, Jeffrey D., 2025. "Coping or hoping? Livelihood diversification and food insecurity in the COVID-19 pandemic," Food Policy, Elsevier, vol. 131(C).
    2. Beck,Anne Helene & Lim, Sunghun & Taglioni,Daria, 2024. "Understanding Firm Networks in Global Agricultural Value Chains," Policy Research Working Paper Series 10774, The World Bank.
    3. Beck, Anne & Lim, Sunghun & Taglioni, Daria, 2024. "Understanding firm networks in global agricultural value chains," Food Policy, Elsevier, vol. 127(C).
    4. Hadachek, Jeffrey & Ma, Meilin, 2024. "Risk Externalities in Vertical Supply Chains," 2024 Annual Meeting, July 28-30, New Orleans, LA 343748, Agricultural and Applied Economics Association.
    5. Timothy J. Richards & Zachariah Rutledge & Marcelo Castillo, 2024. "Labor shortages and agricultural trucking rates," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 72(2), pages 105-129, June.

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